“We are on the verge of reducing rates for SMEs,” SBI chairman Pratip Chaudhuri said

State Bank of India (SBI) said it will cut lending rates on loans given to small and medium enterprises (SME) this month.

“We are on the verge of reducing rates for SMEs. If that happens, some lending rates will be reduced by 1%-2%. So, as we get a greater sense and certainty about liquidity we will cut the rates in all likelihood by April,” SBI chairman Pratip Chaudhuri said.

The government has hiked interest rates on public provident fund (PPF) to 8.8% from 8.6% earlier, while the post-office monthly income scheme (MIS) will give 8.5% interest against 8.2%. Post-office term deposits (TDs) of one and two years now provide 8.2% and 8.3% interest, respectively, an increase of 0.50%.

The new rates will remain effective for the entire 2012-13 fiscal. Interest rate for three-year TDs has been increased to 8.4% from 8%, while five-year deposits will earn interest of 8.5% (8.3% earlier). Five-year recurring deposits offer an interest of 8.4%, against 8% earlier. The rate for senior citizens savings scheme has been hiked to 9.3% from 9%. The national savings certificates of five and 10 years maturity now provide 8.6% and 8.9% interest, respectively, up 0.2% each. There has been no change in the post-office savings deposit rate which remains at 4%.

Meanwhile according to PTI, around 4.6 million employees are afraid of losing income-tax (I-T) waiver on retirement benefits, the Union labour ministry has said that it will soon approach the finance ministry for continuation of the tax exemption for about 2,400 private provident fund trusts (PPFTs). This would be incorporated in the 2012-13 Budget. Out of 2,700 PPFTs, only 284 have so far been given the exemption certificates from the labour ministry; 400 applications are still being processed.